RENEWED COLLAPSE; FULL ROUT IN COMMDOITY STOCKS UNDERWAY

The losses in commodity stocks this past month is nothing short of staggering. We have seen this before and I’d be lying to you if this wasn’t reminiscent of the great bubble collapse of 2008, where we bore witness to oil collapsing from $140 into the $30s in short order thanks to a global collapse of economic activity.

Here are some notable losses in commodity names the past month:

XOM -18%, SHEL -22%, COP -31%, RIO -25%, DE -21%, VALE -27%, FCX -36%, CNQ -29%, EOG -31%, NUE -19%, FANG -30%, MOS -28%, TECK -40%, CRK -47%, X -32%, CLF -35%, BTU -28%

You get the drift.

One would surmise these losses would abate soon.

Let’s look at DE for example.

April -9.2%
May -5.2%
June -16.3%
July to date: -4.2%

Great names have been taken to the woodshed, all due to various reasons. The primary one is America hitching itself to the losing Ukraine. Let me repeat it: we are hitching ourselves to a sure loser in a war against a world power that is gaining allies on a daily basis and the world is becoming more and more bifurcated between the liberal world order and something opposite to that effect.

Just this afternoon “the west” declared they might affix a price cap of $40-60 on Russian crude. Are they so crazy that they believe this would be accepted by Russia?

Nevertheless, I am tempted to buy commodity dips here, but would prefer to begin adding late in the afternoon. I already own OXY, hedged with UVIX. I am likely to compile a short list of stocks for ownership by the session end. My goal is to have a high sharpe on my portfolio management and avoid large drawdowns. To do this I avoid intra-day swings by being in cash and only get aggressive in the late afternoon, but never without hedges.

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